1. Introduction
The People's Republic of China (PRC) heralded an age of remarkable economic growth following the introduction of its open door policy in 1978. As a result, China's red capitalism provoked numerous European and U.S. companies, (defined here as Western) to enter the market and become important players in China's capitalist system. Today, this golden age for European and U.S. business in China is coming to an end. In its attempt to emancipate itself from foreign capital, China's state party has aggressively introduced policies that increase innovation capacity.Footnote 1 On its way to becoming one of the world's greatest innovators of high-tech products,Footnote 2 China has implemented a state-driven and top-down national innovation system. While this policy serves its purpose for a powerful international country, the methods, as Western business argues, are not always in line with neo-liberal values.Footnote 3 In other words, Western business argues that indigenous innovation policies lead to unfair business practices at the cost of Western capital. In contrast, Chinese businesses enjoy tax-cuts, better access to capital and beneficial subsidies and at times better access to procurement bids. This leaves Western companies with higher investment and distribution costs in the Chinese market.
China's reliance on its domestic market, and the rising self-esteem that comes with it, has prompted reactions from the E.U. and U.S. business community in China. In response to rising pressures on returns, Western businesses have increased efforts to actively shape their business environment through interest group lobbying. Lobbying is broadly defined as the attempt to actively influence policy-making and refers to collective bargaining of interest groups. The term lobbying cannot be easily tied to a Chinese context since actively shaping policies correlate specifically with democratic-pluralist systems. In contrast in top-down corporatist state-society systems, interest groups have to relinquish autonomy in exchange for access to governmental institutions.Footnote 4 Thus Chinese groups struggle to actively influence China's policy-making process through institutionalized channels. Moreover, Chinese authorities find it difficult to concede in public that interest groups play a vital role in the policy-making processFootnote 5 and thus lobbying is not a term that is commonly used in China. However, the term is applied in this paper because it focuses on the attempt of Western interest groups operating in China to shape the domestic business environment. Western groups in China have strong connections to their home democratic political systems, where lobbying is an integral part of policy-making. In a democratic-pluralist system, the role of multiple stakeholders plays a vital role in the policy-making process and is a desired tool of democratic decision-making. The system of state-society relations, pluralist and neo-corporatist alike, allow interest groups bottom-up articulation of grievances. As a result, interest groups that lobby in Europe or in the United States are far more transparent in their lobbying attempts than Chinese interest groups. They confront their governments and openly articulate concerns to the government on behalf of their members, which stands in contrast to China's state-corporatist arrangements where groups serve the interest of the authorities.
The main conceptual framework of this article is a state-corporatist perspective. This is not to say that China's state party has not moved away from a pure-top town system in which interest groups are merely the extended arm of the government. Yet it remains China's reality that in order to alter policy, Chinese interest groups have to navigate within or between the “cracks of the system,” make use of their position within the system, and apply a state-corporatist mentality. One avenue for Chinese interest groups to exert influence is through these cracks in the system. China’s fragmented, state-corporatist system gives momentum to Chinese lobbying through the back door,Footnote 6 an access that is constrained for foreign groups. Thus Western groups, outsiders of the system and accustomed to lobbying in a pluralist system are reacting to a changing business environment distinct to Chinese groups.
To-date scholars have paid little attention to the reaction of Western businesses to the decreasing business opportunities in China's state-capitalist system. This article represents one attempt to address this lacuna in scholarship by asking how Western businesses in China react to decreasing market opportunities. It draws from a series of semi-structured interviews and written sources collected over the course of four years of research between 2010 and 2015.Footnote 7
This article argues that European and U.S. businesses react to China's increasingly competitive business environment by actively applying Western-lobbying strategies. This also article shows how Western interest groups are able to transfer the lobbying techniques of an open-democratic system. China's state system is unsurprisingly less able to put Western lobbying power on a similarly tight leash. Moreover, China's state party has even been responsive to these attempts and has altered a number of policies and regulations. Contrary to recent discussions on the declining freedom of Western interest groups in China, this article shows that there are avenues, at least in regard to business policy, for engaging in policy dialogue within the framework of China's corporatist system.
The findings of this article contribute to two fields of research. First they provide insights as to how China's corporatist systemFootnote 8 allows Western interest groups to shape policy. The very distinct organizational structure of Western interest groups and their different relationship to the Chinese state have been neglected in scholarship concerning lobbying and interest representation in China. This is somewhat surprising given that the relationships between the Chinese state and the Western groups are distinct to their Chinese counterpart. As such it enables specific Western lobbying strategies. Second, the findings will contribute to a better understanding of E.U.Footnote 9 and U.S.Footnote 10 lobbying methods. It shows how Western groups rely on inside/outside lobbying techniques as well as on transnational venue shopping;Footnote 11 the same strategies that have proved successful in open-pluralist systems.
This article addresses the question of Western lobbying in four stages: (i) It lays out the role foreign business has played in China's economic development and in its corporatist system; (ii) It provides a brief introduction to the contextual structure of China's state-society relations and how China's opposing forces are embedded in its state-led policy-making process; (iii) It explains the Chinese way of political bargaining and particularly the Western way of lobbying in China; (iv) It concludes by considering the distinct role of Western interest groups in China's corporatist system.
2. From the knight in shining amour to the great competitor: The changing role of foreign business in China's state-corporatist system
The role of foreign business in China's economy has evolved over a period of thirty-eight years. In the early 1980s, foreign capital was the crucial variable to develop China's economy. Foreign investments went in line with a gradual opening of the market, a new experience for communist China before 1978. China's authorities were well aware of the risk of unpredictable foreign actors in a system that was isolated from capitalist market forces. As one crucial vehicle to attract foreign investments and to maintain control, China identified and implemented dedicated investment areas, the special economic zones. This way China could test its opening policies in a certain controlled areas mostly along the cost line. After the first special economic zones proved to be successful, China progressively implemented additional zones throughout the country. As a result of this activity, between 1978 and the early 1990s China's share of imports and exports in overall Gross Domestic Product (GDP) converged to the world average.Footnote 12 At its peak in 1994–1997, foreign direct investments climbed to 15 percent of annual investment in China.Footnote 13 With increasing foreign investments, China's rulers had to carefully protect its grip on the economy and society at large. The government proclaimed quite openly at the time that one of the main goals of its reform effort was to reinvigorate its power and reinforce its authority.Footnote 14 However, besides being a liability for the political status quo, foreign direct investments proved an effective method to advance China's economy.
China's official announcement to introduce a socialist market economy in 1992 further boosted foreign investment.Footnote 15 Foreign investments played an enormous role in building China's capitalist system, especially in the beginning years. After gathering a positive experience and in the aftermath of the dissolution of the Soviet Union, the state party's aim was to create a positive business environment for foreign investments. This served two purposes; first an increasing gross domestic product raised satisfaction with society and thus lowered the chance of societal challenge of party rule. Second, increasing business opportunities for foreign business also kept the possibility of conflict between Western capital and China's authorities low as the former had lesser reason to articulate grievances. This helped to maintain a system of control aimed at keeping societal conflict to a minimum.Footnote 16 As such, foreign businesses enjoyed special treatment: notably tax cuts and free land use. The key position of Western business in re-building China's economy gave momentum initially to networking and “getting to know each other” activities, rather than to full-fledged lobbying activities. Western business was interested in information gathering and monitoring rather than influencing policies of a country so little known to the Western business world. It was pleased by the new investment opportunities in the newly opened market and vice versa, China appreciated inflowing capital and technology transfer.Footnote 17
As China's economy matured so did the government's strategic ability to use foreign investments to generate economic growth.Footnote 18 Local governmental officials had to meet economic targetsFootnote 19 and thus foreign capital proved to be a useful to tool. Although the party centre allocated some power to lower levels, the question of controlling conflict within the party system remained crucial. China's party centre needed to balance the tension between supporting foreign investments and controlling their activities.Footnote 20 This exercise became more difficult with the granting of power to lower level governmental officials for decisions concerning allocation of economic incentives to foreign business.Footnote 21 Western business, unsurprisingly, took advantage of this openness to negotiate the best possible investment conditions.Footnote 22
However, state-corporatist mechanisms that were established to monitor the activities of Chinese actors soon proved to be ill-suited for exerting a similar degree of control over actors that entered China's system. In contrast to the beginning years of market opening, the Chinese state evolved in its methods to monitor foreign investment;Footnote 23 methods highly contested in the notion of negotiations for China's World Trade Organization (WTO) membership. One way to control Western investment was to force E.U. and U.S. businesses into joint venture arrangements. Between 1979 and 1997 equity joint ventures took the lion's share of inward investment,Footnote 24 a practice that made foreign companies worry about intellectual property protection. As a result lobbying activities increased.Footnote 25 The ability of European and U.S. business to address grievances on issues crucial to the policies of their home governments showed how ill-suited China's state-corporatist system was to taming Western interest groups. China's intellectual property right (IPR) became a diplomatic tool that dominated the United States-China political discussion. Joint pressure of foreign interest groups, backed by home-government support, resulted in policy change not only on IPR but also in other policy areas such as indigenous innovation. At times foreign lobbying activities were so successful that IPR protection was more favorable to foreign companies than to Chinese.Footnote 26 Foreign companies were able to bypass China's state-corporatist mechanisms of control by involving European, U.S., and international political venues into the policy debate.
China further opened its markets to the West upon joining the World Trade Organization (WTO) in December 2001. Membership opened up new possibilities to bypass state-corporatist constraints as it gave momentum to transnational venue shopping—a useful lobbying method if the domestic government does not respond to policy pressures.Footnote 27 China's decision to join the WTO gave further impetus to China's opening up and reform. China agreed to multilateral trade rules, which utilized foreign direct investments. It influenced state-society relations between foreign groups and the Chinese state because WTO binds China to international trading rules as well as to a non-discriminatory business environment for foreign capital. This clearly includes the way in which Western businesses can interact with the state.
In the same vein, albeit WTO regulations, the Chinese government has implemented several unique sets of standards, such as the China Multimedia Mobile Broadcasting (CMMB) standard for mobile TV, the WLAN Authentication and Privacy Infrastructure (WAPI) standard for wireless Internet access, the Audio Video Standard (AVS) for audio/video encoding, and the Enhanced Versatile Disc (EVD) standard for future 4G consumer electronics.Footnote 28 These divergent standards are one example of China's rising self-esteem to rely on home-grown products rather than counting on foreign investments to stimulate the economy. The increasing investment costs and maturing Chinese innovation gave particular momentum to Western lobbying actions. Multiple foreign business associations, such as the U.S. Information Technology Office and the European Information and Communications Technology Industry Association,Footnote 29 collectively lobbied the legislative and executive branches of their home governmentsFootnote 30 to influence China from the outside. It is one example that illustrates how China's party state cannot isolate themselves from foreign pressures. This is to say that China's integration into the world economy and into the global economic governance system, has had an impact on the role of foreign capital. Foreign business associations and large foreign investors insisted they would not adapt certain standards and thus would stop shipping products relevant to the Chinese ICT market.Footnote 31 Western capital was able to simply by-pass the system and forced the Chinese government to comply with Western standards.
This success is remarkable considering China's approach to greater societal and governmental control as the favored key policy instrument. China's recent approach to economic upgrading goes hand in hand with increasing tools to monitor and govern its markets.Footnote 32 It relies on well-known, top-down state-centric tools and methods to steer economic policies and support home-grown innovation.Footnote 33 The ability of Western business to successfully influence policies could be one reason that China aimed to put Western interest groups on a tighter leash by the introduction of a new law on foreign non-governmental organizations. Another reason could be that the importance of foreign capital to stimulate the economy is declining. While still aiming for technology transfer, China wants to rely on its own innovation power and support domestic companies to be competitive not only in China but also world-wide. The law went into effect in January 2017 with the aim to implement state-corporatist monitoring methods such as state agency registration requirements for Western interest groups. It remains to be seen how this law will affect Western lobbying groups. Research has shown that some groups have already registered with a state sponsoring institution and those who have not are vulnerable and are less likely to apply aggressive lobbying strategies.Footnote 34 In practice, rather than controlling the relationship, the institutionalization provides better access and is seen as friendly cooperation with mutual benefits rather than a tool of state control.Footnote 35
However, the law's introduction comes at an inconvenient time since shaping the business environment is crucial as China invests heavily in home-grown technologies in order to give domestic businesses a competitive advantage. As one interviewee argued: “The Chinese government used to provide so many incentives for foreign business, nowadays Western companies are only welcome if they can transfer technology.”Footnote 36 While Western businesses are opposed to this practice, state-owned enterprise managers and private Chinese entrepreneurs are in favor of it. Both sets of actors navigate within China's state-corporatist system to positive effect. Actors can communicate easily and networks are strong. State-owned enterprise managers and private entrepreneurs have urged the Chinese government to secure and increase their market share against Western capital.Footnote 37 Thus being part of the system enables a direct line of communication, which in turn can help to reinforce their goals.
In summary, the role of foreign capital changed from 1978 to now. From being a crucial vehicle to stimulate the economy, it increasingly faces fierce competition from domestic companies. This competition is no coincidence; China's authorities have launched initiatives to upgrade the economy and to focus on indigenous innovation power. China has become an economic powerhouse with a certain confidence in its domestic market power, which correlates with the declining importance of foreign capital.
3. Interest groups in state-corporatist China
This section elaborates on the role of interest groups in China's state-corporatist system, the analytical framework applied in this article. In a state-corporatist system, the control mechanisms used to tame interest groups are: the power of the state to structure groups by creating officially sanctioned, non-competitive, compulsory interest associations.Footnote 38 In addition, interest groups dependent upon state subsidies enable the state to impose rules regarding policy implementation, leadership selection, and internal governance. The state steers and limits the number of officially recognized, non-competing, state-supervised groups.Footnote 39 State corporatism tends to be associated with top-down political systems in which lower political levels or other subunits are steered by a centralized one-party government. Elections are either non-existent or non-democratic.Footnote 40 Such an authoritarian government structure can easily establish a top-down associational system with little or no space for bottom-up societal interest articulation.Footnote 41
While China's state-corporatist system is still in place, as noted in the introduction, top-down centralist party politics are fragmented. The state lacks the ability to regulate every sphere of the private sector.Footnote 42 China's lower political levels are not steered solely by the party centre. Lower level policy makers enjoy a certain degree of freedom on some economic issues. Furthermore, rather than being subordinate directly to the centre, each administrative level receives orders from the next level above. This makes a top-down corporatist chain of command vulnerable to traditional, corporatist governance structures.
China's fragmented corporatist system can best be illustrated with the All China Federation of Industry and Commerce (ACFIC). As one the most influential Chinese chambers of commerce in China, it serves as a good example of how a state sponsored group is closely monitored as it navigates between the cracks of the (fragmented) corporatist system.Footnote 43 The ACFIC was established in 1953 under the leadership of the United Front Department of the CCP. The Chinese government modeled the ACFIC after a classical Leninist transmission belt organization with the task to educate and unite the capitalist class, such as China's business elite, with old capitalists. China's first five-year plan of the newly established People's Republic triggered the decline of ACFIC due to the fact that with the plan, China's economy was reorganized to establish socialist public ownership.Footnote 44 However, the ACFIC was revived through the “1978 open door policy” because the ACFIC, as a classical mass organization, became an important tool in the control of society. To this day, the ACFIC supports the Chinese government in its attempt to implement economic policies.Footnote 45 The ACFIC is organized into local subsidiaries, such as the Federations of Industry and Commerce (FIC), that differ substantially from region to region thus FICs cannot be completely controlled from the center by ACFIC. As a result, local FICs, particularly in large cities like Shanghai, are to some extent in a position to defend the interests of their members. This is a sign of fragmented corporatism. It shows that the state party is simply not able to control every strata of society. It is only within the corporatist mode that some degree of autonomy is allowed to Chinese interest groups.Footnote 46 Still many of the Chinese interest groups are established top-down and are thus organized along Communist Party lines.
Another sign of a general state-corporatist approach is that the Chinese state is successfully expanding mechanisms to control the economy and align society.Footnote 47 Increasing numbers of private entrepreneurs are members of China’s Communist Party (CCP)Footnote 48 and/or participate in People's Political Consultative Conference.Footnote 49 China's economic elites seemingly have little desire to proactively influence public affairs. Instead they are closely intertwined within party structures, which in turn results in similar perspectives on China's economy.Footnote 50 State power even goes beyond alignment. The Chinese government relies on its capitalists to keep the economy and the system running.Footnote 51 The little interest shown by China's economic elites to oppose the government is also reflected in China's business associations or interest groups. Contrary to the behavior of Western interest groups, members of Chinese interest groups do not openly oppose the shaping of public policy by government.
3.1. Lobbying the Chinese way
Whereas the political systems of the European Union and the United States not only enables but also actively fosters lobbying,Footnote 52 in China a very distinct picture is drawn. In Western political systems, political contest within society is the primary assumption that underpins the right to shape public policy. Therefore, rather than threatening the political order, conflict is seen as a much needed instrument of policy-making.Footnote 53 In contrast, China does not perceive conflict as an inherent part of society let alone policy-making. In contrast it is seen as a threat to societal harmony. As a result, political bargaining or lobbying in China is not part of Chinese culture and thus not conducted in the open. This is not to say that Chinese actors do not aim to shape politics. Yet their methods of influence cannot be compared to those in Western liberal systems. In China, influence over policy is affected through direct ties and mutual agreement rather than through direct opposition.Footnote 54 To be more precise, a great number of Chinese associations prefer to contact local governments in private meetings. The majority of those engaged in these processes have never interacted with the National People's Congress or the Chinese People's Political Consultative Conference.Footnote 55
Rather than openly confront government, business and government mutually empower each otherFootnote 56 in a dialectical relationship between the policy makers and the entrepreneurs. However, the party's attempt to align its entrepreneurs is not always successful and this relationship is not without conflicts. The two contracting realms are fighting for influence while compensating for each other's institutional weaknesses.Footnote 57 China's entrepreneurs engage in this relationship to secure higher surpluses as the party networks open up business opportunities for them.Footnote 58 But their mutual empowerment has until recently resulted in a stable dynamic in China's “Sino-capitalism.”Footnote 59 China, with top-down state guidance, supported private enterprises in their business successFootnote 60 and in turn, China's entrepreneurs rarely oppose the government in the open. Of late the Xi administration has put an emphasis on strong governmental intervention in the market: “we need to give leverage to the superiority of our socialist system, and let the Party and government perform their positive functions.”Footnote 61 The role of the private sector and entrepreneurs remains overseen by the government and thus their power to influence policy-making is diminished.
This stands in contrast to a Western approach of shaping policy where Western bottom-up interest groups are able to openly fight against policies. In contrast, within the Chinese version of lobbying, the overall goal is to align the interests of state and capital.Footnote 62 The more Chinese private capital is intertwined into party structures, the less opposition the CCP has to fear. Thus Chinese businesses influence economic policies within party structures. Private business people give up power in exchange for influence. Lobbying, from a Western perspective, takes place in a different fashion.
4. Western lobbying in China
The previous section showed how lobbying in a Western pluralist fashion is not an integral part of the system. Thus, this section elaborates on how E.U. and U.S. businesses aspire to shape China's indigenous innovation policy via the creation of a business environment conducive to its own interests. Analysis showed that Western companies in China prefer collective bargaining to individual lobbying. They are concerned that individual company lobbying leads to direct confrontation with Chinese officials and subsequent governmental negative consequences.Footnote 63 In order to avoid this outcome, a number of Western companies have joined E.U. and U.S. interest groups in China, that in turn lobby on behalf of their members. This makes Western interest groups a crucial vehicle for E.U. and U.S. companies to influence China's policy-making procedure.
Western interest groups in China are established along similar pluralist lines to their counterparts in the West. This is to say that actors in Western interest groups in China can motive their constituency more easily than their Chinese counterparts. To influence legislation in Europe and in the United States it is common practice that groups oppose the government in the open through grassroots mobilization tools such as protests. In other words, they are used to conveying opinions openly to legislators, political institutions, and other forms of political decision makers. In China, by contrast, it is assumed that the political and state-corporatist system are not the only variables that influence Western lobbying strategies. Other variables are the Western organizational structures and the Western “imported” lobbying culture. To argue that Western interest groups simply comply with state-corporatist constraints and only use inside personal networking strategies would be short sighted.
Western groups can make use of a broad range of inside and outside strategies. They can rely on inside strategies such as direct communication with policy-makers in the form of private contacts, personal presentations, and testimonies before congressional committees.Footnote 64 Other inside strategies can include the launch of publications and reports, the organization of projects, cocktail receptions, and formal or informal events.Footnote 65
Western groups can make use of outside strategies because they are not entirely co-opted into the state-corporatist system. The main mission of a Chinese group is to provide governmental support rather than acting on behalf of its constituency. This is in contrast to bottom-up membership driven Western groups that aim to create a more favorable business environment for its members. They are member driven organizations in regard to their internal structures and voting procedures with little interference of any kind from government. Membership mobilization is a crucial lobbying instrument for Western groups in China. Interest groups from the sample show a preference for the outside lobbying actions such as “membership mobilization.” The groups motivate members to engage in the policy fight. In Western lobbying literature, the attempt to mobilize a given constituency is conceptualized as outside strategy.Footnote 66 As this research is tied to Western interest groups and in the attempt to provide comparable results, “membership mobilization” is defined as outside strategy.
This fine distinction becomes even more crucial when tied to the Chinese context because the top-down, state-corporatist system constrains a bottom-up membership mobilization. To actively involve members in the policy fight is constrained in such a system. However, it would be short-sided to simply assume that every lobbying action in China has a personal dimension and thus can be conceptualized as inside. Chinese and Western interest groups alike can rely on a number of outside strategies such as media usage, launching press releases, organizing press conferences, talking to the press, and holding interviews.
In the following sections European business lobbying strategies are presented and compared to U.S. business lobbying strategies.
In figure 1 “EUCCC leading lobbying actions,” the most frequent lobbying action of the European Union Chamber is to arrange meetings with European policy makers where barriers to market access are addressed. This is where members of the chambers are not only invited to engage in discussions but also play the leading role. These meetings mainly target either European officials working in the European Delegation in China or European officials traveling to China. As such, European business in China plays a crucial role in informing E.U. officials about China's changing business climate.Footnote 67 As a result, China's party state faces resistance not only from within China. European policy-makers support European business in China and create a favorable business environment. This is to say that Western capital engages in the policy fight by practicing “transnational venue shopping.”Footnote 68 The concept of venue shopping describes how interest groups aim to change the agenda and the location of the debate by attracting non-involved participants. Groups aim to shift policy interests to political venues that are either already in favor of their policy interests or more receptive toward the group.Footnote 69
Figure 1: EUCCC leading lobbying actions.
One reason for the frequent use of E.U. contacts, as shown in figure 1, is that E.U. policy makers are an official line of communication to China.Footnote 70 As one interviewee argued: “We actively ask the European Commission to put pressure on China's policy-makers.”Footnote 71 Moreover, the European Chamber in China can avail itself to the close ties members and employees of the chamber have to their domestic political systems.
The high number of meetings with U.S. officials shown in figure 2 shows that the E.U. and U.S. chambers alike try to exploit their networks to lobby U.S./European political institutions or other actors in their home political systems in order to shape the business environment in China. Putting pressure on China's public affairs at the international level has been successful not only for E.U. but also for U.S. interest groups. By using high-level diplomacy, policies have been altered in several instances such as intellectual property rights and the WAPI standard.
Figure 2: AmCham China leading lobbying actions.
Figure 1 and 2 indicate that the EUCCC and the American Chamber of Commerce in Beijing both have a high number of meetings with membership involvement. This proves that E.U. and U.S. interest groups alike are able to actively engage their members in the policy fight. With hindsight to China's state-corporatist system, this finding is crucial because it is a lobbying action mostly used in pluralist systems.
Referring to figure 1, the EUCCC explains the high number of lobbying actions in which the members play a leading role with its wide network that give momentum to grassroots mobilization. They can draw on its membership network from a number of their subsidiaries throughout China. Employees of EUCCC pointed out that their member (companies) have vast networks and expertise at their disposal. For example, member companies are highly involved in conducting research and writing the Chamber's publications.Footnote 72
Furthermore, the open nature of EUCCC's internal organization enables significant member involvement. This means that it is organized along the lines of membership engagement, a pluralist feature. The Chamber runs a number of working groups that bring together member companies from different sectors or other horizontal issues. Moreover, members have a voice in various forums, working groups, and task forces. This is not only valid for the results of figure 1; both U.S. chambers are organized along pluralist lines, which is also reflected in lobbying actions of figure 2 and figure 3.
Figure 3: AmCham Shanghai leading lobbying actions.
Research shows that China's political system is not necessarily disadvantageous to EUCCC's and the AmCham's modus operandi. While it is not open to outside lobbying actions, such as protests or other confrontational techniques, mobilizing members to engage directly with policy makers is a relatively straightforward lobbying practice that is not antagonistic to the political system.
Figure 1 indicates that the second most frequent lobbying action of the EUCCC is the presentation of the position paper. The position paper is one of the main driving forces that shapes policies and is presented to European and Chinese policy makers. As a business manager stated: “Once it's published, then the Position Paper is taken to the relevant governments […].”Footnote 73 Especially for the Chinese governmental officials, the position paper is used as a door opener and a reason to schedule a meeting. The Chinese government is interested in Western perspectives on the Chinese market and thus position papers can prove to be an effective lobbying tool. Position papers also prove effective in terms of Chinese media coverage.Footnote 74
The third most frequently used lobbying strategy shown in figure 1 is the meeting of Chinese officials with the EUCCC and its members. In contrast to more confrontational outside lobbying strategies, this strategy targets Chinese policy makers in a way that mitigates rather than creates conflict. Regarding letter writing, the fourth lobbying action listed, the EUCCC reacts to calls for comment from the Chinese government rather than sending letters to E.U. policy makers. China's political system is relatively open to non-binding feedback from interest groups, and the EUCCC takes advantage of this opportunity. Chamber members provide information for letters and are exhorted by the EUCCC to draft them.Footnote 75 For example in the important issue area of public procurement, as one interviewee described:
… when the Chinese government first introduced new regulations on public procurement we got scared. We thought it is just a way to protect Chinese companies? […] So we wrote a letter. And we cooperated with the American Chambers very much on it. Because it is probably the biggest issue that explicitly on anti-foreign sentiments we decided to write to three ministries.Footnote 76
Referring to the lobbying action “letter writing” in figure 1, the letter on indigenous innovation that the EUCCC submitted to Chinese authorities illustrates the potential impact of engaging with policy makers. The Chinese government reacted promptly and stated in a letter that there was no reason to be concerned. However, this answer did not eliminate the policy concerns. Since the EUCCC launched the letter campaign, this discussion has escalated to the highest level. The EUCCC provided the same kind of information also to policy makers in the E.U., e.g., the European Commission. Former president of the European Commission, Manuel Barroso, directly referred to the Chamber when urging former Chinese President Wen Jiabao to support open trade and refrain from using indigenous innovation as a tool for limiting market access.Footnote 77 In turn, China's sixth Premier Wen Jiabao addressed the issue on multiple occasions.Footnote 78 This shows that borders between either state-led or business-driven agencies are blurry with discussions initiated bottom-up and advanced further on at the highest level.Footnote 79
The lobbying actions of the EUCCC listed in figure 1 ranked briefing events fifth and working group organized events sixth, and also show how members play a crucial role in lobbying actions. They help to organize and/or participate in briefing events with policy makers. These briefings enable members to discuss current events and political-economic trends with senior government officials who are experts on specific areas in China.
Figures 1, 2, and 3 show that all chambers launch press releases. Additional research showed that Western groups actively engage with the Chinese and Western media to shape China's business environment in their favor. Press releases support the process to engage with Chinese and E.U./U.S. media.Footnote 80 The American Chamber of Commerce in Beijing (AmCham China) frequently receives media requests to comment on issues, e.g., the National Party Congresses and topics regarding indigenous innovation policies. At the same time the Chinese media cover issues concerning the EUCCC it also covers topics that concern AmCham China and AmCham Shanghai. And aside from the official Chinese media like South China Morning Post, China Daily, China's News Service and China's TV channels CCTV, foreign media outlets like The Los Angeles Daily Journal, France24, Neue Zuercher Zeitung, COX Newspapers, Hong Kong Asia Television, and Economic Observer covers AmCham issues.Footnote 81 This shows that even within China's media system, outside techniques are possible.
As shown in figure 2 and 3, both U.S. chambers use presentations of white papers as a lobbying tactic but also pursue other lobbying strategies; as indicated in figure 2 AmCham China holds more meetings with member participation whereas AmCham Shanghai (figure 3) does not involve its members to the same extent. It is likely that AmCham Shanghai's lack of member involvement stems from its membership structure and absence of pan-Chinese offices.
Figure 2 and figure 3 show that there are several differences between the overall lobbying strategies employed by the U.S. chambers in their respective attempts to alter indigenous innovation policies. AmCham China and Shanghai launched press releases via Chinese and Western media outlets and held member events in support of changing indigenous innovation policies. AmCham Shanghai published articles on indigenous innovation policies in its membership magazine and produced reports on the topic. AmCham China and AmCham Shanghai pursued numerous media strategies to address the issue of indigenous innovation. The pan-Chinese media system can give momentum to such media strategies. The multi-sector nature of the indigenous innovation gave considerable momentum to the media strategies in the United States. Thus, when it comes to lobbying preference on indigenous innovation policy, AmCham in China prefers the same type of media strategies as their U.S. counterparts. Indeed, interest groups in the United States frequently employ very elaborate media campaigns.Footnote 82
If the results of figure 2 and 3 are compared to lobbying actions of groups located directly in the United States,Footnote 83 it can be said that they differ from the lobbying actions of AmCham in China. The most crucial difference is that confrontational, outside strategies such as protests are much more prevalent for lobbying activities within the United States.
In summary, when comparing lobbying actions of figures 1, 2, and 3, although the frequency of lobbying varies between E.U. and U.S. groups, they share a number of similarities in regard to the tactics. Neither the U.S. chambers nor the E.U. chamber rely on confrontational outside strategies such as protests. Rather, they employ strategies that involve members and—to a lesser degree—direct discourse in meetings between European, American, and Chinese policy makers. This means that China's corporatist system constrains lobbying actions to some extent. However, there is still a stark contrast to Chinese interest groups that are embedded in the corporatist system. The lobbying actions applied prove that Western interest groups are true membership driven organizations. Furthermore, the groups reach out and shift the policy interest to other venues frequently. Western lobbying has greater leverage to influence the Chinese state (with conventional lobbying strategies) than Chinese interest groups.Footnote 84
4. Conclusion
This paper provided insight as to how Western interest groups lobby in China's corporatist system. Throughout this article, examples were given to highlight specific ways that Western groups in China are actively involved in the “policy-fight.” It was demonstrated that China's aim to upgrade its economy is accompanied by a declining reliance on foreign capital to stimulate the economy. Western business in China is increasingly becoming unsatisfied with this situation, which in turn gives momentum to lobbying actions inside and outside of China. Declining surpluses correlate with a growing willingness to mitigate the adverse effects. Western groups penetrate the Chinese system from outside rather than relying simply on inside networking strategies (guanxi).
The paper demonstrated that the Western interest groups from our sample are able to explore pluralist avenues because they are less embedded than Chinese interest groups into the corporatist system. While being not fully integrated in the state-corporatist system has a number of advantages, e.g., Chinese authorities do not define the mission and the purpose of the group, it also means that access to Chinese government officials and political institutions is more constrained than for Chinese groups. This paper also demonstrated that Western groups gear a high number of actions toward E.U. and U.S. policy-makers. All three cases showed a strong reliance on the existing network with home policy-makers. Rather than directly conveying the message to the policy-owner, i.e., Chinese authorities, the issue is escalated to another venue outside of China. This route of transnational venue shopping could be a result of easier access to Western pluralist political venues and constrained access to the Chinese system. The focus on transnational venue shopping and its success show that the Chinese government is not only willing to engage international interests in the policy debates but also to listen to the West; again to an extent greater than might intuitively be assumed.
Collectively, the lobbying strategies described in this paper revealed a more complex and adaptive system of policy dialogue between Western business interests and the Chinese state than is often assumed. The Chinese state is shown to be more responsive and adaptive to exogenous policy pressures from international business. This is in stark contrast to how the party state reacts to its own domestic business communities as they are deeply embedded in its corporatist state-society structure. The Chinese state aims to co-opt capital, a practice that is more difficult to apply to Western actors in the state-corporatist system. While this is not to say that Chinese actors are prevented from exerting influence, the strategies that the West has employed could not be more distinctive to the Chinese way of personal-inside engagements. Chinese groups navigate between the cracks of the fragmented corporatist system. They aim to exert influence through mutual agreement rather than through open opposition in the public sphere. Rather than confronting each other, business and government have a mutually empowering relationship.
The paper highlighted not only divergences between Chinese and Western groups but also differences in lobbying preferences between E.U. and U.S. groups. The tone of the U.S. Chamber in China toward the Chinese authorities is at times sharper than those of the EUCCC. However, this article sheds light on the fact that all the groups rely strongly on membership-driven lobbying actions. To engage in the policy dialogue, they mostly rely on their constituency to launch membership-driven lobbying strategies. This finding is somewhat surprising because Chinese groups act upon Chinese authorities rather than bottom-up on behalf of their constituency. This shows that China had to relinquish some of its state-corporatist mechanisms such as top-down establishment of the group for inward foreign investments. This is to say that China's market opening provides room for Western influence.
In the early years of China's open door policies, the party state was more dependent on foreign capital than it is today. China's increasing economic power and focus on economic upgrading has resulted in a decreasing role for foreign capital. This could have an impact on the way the Chinese state interacts with Western groups. A decline in the importance of Western capital could result in foreign investors having less of a voice in influencing policy-making. Thus China's party state could constrain Western pluralist avenues of lobbying.
As the importance of foreign capital in China continues to decline and as China becomes a more important international player, especially in international economic institutions, we can expect to see a similar decline in the effectiveness of transnational venue shopping by foreign interest groups. Current trends in U.S. foreign policy under a Trump administration are still to be determined but the opportunities for China to gain greater confidence and influence in the global economic system should not be underestimated. As China advances from being a rule-taker to a rule-maker, we should expect Western transnational lobbying in China to become less effective in the long run.
For future research it would be useful to explore whether Western business interest groups are able to obtain this unique position or if China's system of interest representation aims to implement stricter corporatist rules. The recently introduced NGO law hinges on increasing corporatist rules. Also, future research might benefit from a further examination of how Western interest groups that are more politically minded are able to influence policy-making. Departing from this paper, a study on state-corporatist mechanisms for other than business interest groups would actively stimulate the debate on state society relations in China. Another interesting and promising venue for future research would be a comparative analysis between different types of non-governmental Western groups in China and Chinese (governmental) non-governmental groups. Starting from the assumption that non-business groups have significantly less leeway in the state-corporatist system than business groups, a full-fledged comparative study would earn us new insight and advance substantially our understanding of the contemporary debate on political influences in China.
